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NEW YORK (April 18, 2017) — [Jordan Thomas][prior firm], along with co-counsel, Getnick & Getnick LLP, have secured the largest ever tax whistleblower reward in New York state history. New York Attorney General Eric T. Schneiderman announced the $40 million settlement today.
The whistleblower, whose identity remains protected, will receive 22 percent of the $40 million settlement ($8.8 million), the largest amount and percentage share ever for a whistleblower in a New York False Claims Act case not involving Medicaid.
[Jordan Thomas][prior firm] and Getnick represent a whistleblower in a tax evasion case brought against Harbert Management Corporation, an Alabama-based investment company. Harbert had an investment and business relationship with Harbinger Capital Partners Offshore Manager LLC, the investment manager for New York-based hedge funds run by Philip Falcone from 2002 to 2009. The case alleges that the defendants evaded New York state and city taxes by shifting income derived from Harbinger from New York to Alabama to avoid New York’s higher tax rates. The settlement includes Harbert and related entities and individuals. The Attorney General’s Office has announced that its investigation into the conduct at issue in this matter continues.
“This settlement is an important step forward for the use of whistleblower laws to battle tax evasion in New York, and it should serve as a wake-up call for hedge funds with multi-state operations,” said Neil Getnick, Managing Partner of Getnick & Getnick. “The Attorney General’s Office did an extraordinary job working with us and our client in developing this case, illustrating the value of the public-private partnership established by state and federal whistleblower laws.”
“This should be a cautionary tale for wealthy companies and individuals about the probability of detection and prosecution because of whistleblower laws enabling private citizens and their counsel to bring to light misconduct previously invisible to regulators,” said Jordan Thomas, Chair of [prior firm][‘s] Whistleblower Representation practice.
The case was filed under the New York False Claims Act, which was amended to cover tax claims in 2010.